Lack of US Growth Biggest Risk to Global Recovery: Analyst

A recovery in the US housing market and growth for the US economy are key to the global economic recovery, along with growth in China and further funding for Greece, Gary Baker, head of European equity strategy at BofA Merrill Lynch told CNBC.

Getty Images

“If the housing market takes another lurch down, if US does not grow, that’s what can go wrong,” Baker added.

“Really the US is where you have seen the change this year. The US economy is still very important, in terms of size too,” he said.

"There is a clear fear of the unknown...and there is only one previous example and it was not very interesting," Baker said on the approaching end of the second round of quantitative easing in the United States.

"It (the end of QE2) will be more felt in the bonds and currency market...we believe the dollar will strengthen post QE2."

"It’s a Wait and See market – if it does fall apart, QE3 will happen," he said.